Traders on the floor of the New York Stock Exchange, June 18, 2021.
Stock futures were higher early Monday morning after the Dow had its worst week since October.
Futures on the Dow Jones Industrial Average rose 106 points. S&P 500 futures moved slightly higher while Nasdaq 100 futures traded slightly positive. The moves came during a turbulent session with the Dow futures falling about 200 points earlier.
US stocks fell Friday as investors digested new Federal Reserve economic forecasts and worried rate hikes could come earlier than expected.
The Fed raised its inflation expectations on Wednesday and forecast interest rate hikes in 2023. The President of the St. Louis Fed, Jim Bullard, said in the “Squawk Box” of CNBC on Friday that it was natural for the central bank to tend a little more “Hawkish” and to see higher interest rates as of 2022.
The Dow fell 3.5% last week, while the S&P 500 and Nasdaq fell 1.9% and 0.2%, respectively, over the course of the week.
Sectors tied to the economic recovery took the dip last week. The S&P 500’s financial and raw materials sectors lost more than 6% for the week, while the energy sector was down more than 5% and the industrial sector was down more than 3%.
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“Investors might interpret the Fed’s restrictive bias on Wednesday as a sign that extensive post-pandemic US economic expansion may be a little more difficult to achieve in what may be an emerging environment of less expansionary monetary policy,” Goldman Sachs’ Chris Hussey said in a press release .
The yield curve for government bonds also flattened last week. Yields on shorter-term government bonds such as the 2-year bond rose – reflecting expectations for the Fed rate hike. Longer-term returns like the 10-year note fell – a sign of less optimism about economic growth.
Investors await public appearances from Fed members on Monday. Bullard and Dallas Fed President Robert Kaplan will speak virtually at an official monetary and financial institution forum at 9:00 am ET. New York Fed President John Williams is expected to make remarks at an event organized by the Midsize Bank Coalition of America on Monday afternoon.